You can invest for free on nearly every trading platform now. If you have any disposable income to save in a savings account(which I am fully aware is the big IF), there is no reason that money can’t be invested in the market. That’s exactly why the market is doing so well.

I'm skeptical that new retail investors are having such a big impact, but if there's data available then I could be convinced.

If it is true though, then I don't see how it can last with so many of these new investor now being unemployed and losing the $600 a week.

even without the fractional shares mentioned by sibling comments, you can open a vanguard account and get a single share of VTI, which is currently $170 something. no other fees, or hidden weirdness or anything.

or get some bond ETF that has less volatility. the dividends will still exceed anything you get from a savings account.

or even just leave the cash in the vanguard money market fund. that won't even lose value, and actually pays interest.

so... s/the affluent/the educated/ perhaps

You can buy fractional stock in an ETF with Robinhood. It's the savings account for everyone. RH revolutionized this with their commission-free trading and app access.

It's not, though. A savings account that might temporarily lose half of its value in a recession isn't a great option for lower income folks.

If your investments lose half their value in a recession you are horribly over-leveraged. In any case, we are back to Feb highs now, and whatever loss you might have sustained no longer exists, unless you sold at the bottom.

The Dow went from 14k to 7k during the Great Recession of 2007-2009. The S&P 500 saw a similar loss of half its value. Index investing is generally considered a safe approach, not "horribly over-leveraged".

The problem with using the market as a savings account is the times large numbers of people need to dip into savings tend to coincide with the times the market is dipping.

That's what everyone says, but it's based on conventional monetary policy. We have modern methods now and we know the government won't let you starve, won't let you be kicked out, and won't let you receive no money.

If you don't use the stock market as your savings account, that's reasonable for your risk tolerance but the truth is that people have cottoned on to the true risk and they've adjusted their behaviour to match their tolerance.

A savings account shouldn't be your emergency fund to dip into. It should be a lockbox you don't touch, in which case buying the index regularly is a no brainer. If you need to dip into your savings, you need to be expanding your emergency fund before you can think about saving and investing.

A long recession means exhaustion of emergency funds, which means dipping into savings. No matter how well-intentioned you start out, eventually money runs out and that savings/investment starts to look like the remaining option.

Having to do it when it's depleted by market crash sucks.